Spain

Individual - Significant developments

Last reviewed - 31 August 2022

Over the past 12 months, the following significant reforms have been made to Spanish law on direct taxation of individuals:

  • On 15 June 2022, Law 10/2022, of 14 June 2022, on urgent measures to promote building renovation activity in the context of the Recovery, Transformation and Resilience Plan, was published in the Official State Gazette.

The main purpose of the law is to promote the renovation of   inadequate housing and improve its energy rating. In this respect, three temporary deductions are included in PIT which may be applied to the amounts invested in the taxpayer’s main residence or the property leased to be used as a dwelling:

  • A 20% tax credit is introduced for work that reduces demand for heating and cooling by at least 7%. The maximum base for this tax credit is EUR 5,000.

    To qualify for this tax credit, the work must have been carried out between 6 October  2021 (date on which Royal Decree Law (RDL) 19/2021, of 5 October 2021 came into force) and 31 December 2022.

    Properties that qualify for this tax credit will be the taxpayer's main residence or any other property owned by the taxpayer that is leased for use as a residence at that time or is expected to be leased, provided that in the latter case, the property is leased before 31 December 2023.
  •  A 40% tax credit is introduced for work that reduces consumption of non-renewable primary energy  by at least  30% or improves the energy rating of the main residence to "A" or "B". The maximum base for this tax credit is EUR 7,500. Work must be carried out in the same period as outlined above.

    Properties that will qualify for this tax credit will be the taxpayer's main residence or any other property owned by the taxpayer that is leased for use as a residence at that time or is expected to be leased, provided that in the latter case, the property is leased before 31 December, 2023.  Consumption reductions or energy rating improvements must  be  evidenced through the certificate of the property’s energy efficient or improvement in the property’s energy rating issued before 1 January 2023.
  • A 60% tax credit is introduced for work that reduces the consumption of non-renewable primary energy by at least 30% or improves the energy rating to "A" or "B" of viviendas ubicadas predominantly residential buildings. The tax credit will amount to 60% of the amounts paid for the work carried out between 6 October 2021 and 31 December during the application period.

    The maximum base for this tax credit will be EUR 5,000 per year. The amounts paid which are not deducted  because the maximum deduction threshold is exceeded may be deducted, with the same limit, in the following four years. The accumulated deduction base may not, however, exceed EUR 15,000 . 

  • On 29 December 2021, Law 22/2021 of 28 December was published in the Official State Gazette. The main measures contained in this Law that affect the taxation of individuals were the following:

-   The following limits on the reductions to the taxable base due to contributions to social welfare systems are modified:

o   Private insurance covering exclusively the risk of severe dependence or great dependence:

The aggregate of the reductions practiced by all the persons who pay premiums in favor of the same taxpayer, including those paid by the taxpayer himself, may not exceed EUR 1,500 per year (previously the limit was EUR 2,000 per year).

o   Joint maximum limit: As a maximum joint limit for contributions to social welfare systems, the lesser of the following amounts will be applied:

A.      30% of the sum of the net income from work and economic activities received individually in the fiscal year.

B.      EUR 1,500 per year (previously the limit was EUR 2,000).

As from January 1, 2022, this limit will be increased by EUR 8,500, provided that such increase comes from company contributions, or from employee contributions to the same social welfare instrument (same pension plan, company social welfare plan, mutual social welfare fund, etc.) to which the company contributions have been made, for an amount equal to or less than the respective company contribution (previously the limit was EUR 8,000 and the increase had to come exclusively from company contributions).

The amounts contributed by the company deriving from a decision of the employee will be considered as employee contributions.

Own contributions made by the individual employer to employment pension plans or mutual benefit plans, of which, in turn, he/she is the promoter and participant or member, as well as those made to corporate social welfare plans or collective dependency insurance of which, in turn, he/she is the policyholder and insured, will be considered as employer contributions, for the purpose of calculating this limit.

In addition, the limit of EUR 5,000 per year for group dependency insurance premiums paid by the company, which already existed previously, is maintained.

- Extension of the excluding limits of the objective estimation method: The quantitative limits that have been applied in previous years and that delimit the scope of application of the objective estimation method for the economic activities included in the scope of application of said method, with the exception of agricultural, livestock and forestry activities, which have their own quantitative limit by volume of income, are extended for fiscal year 2022. 

  • On 22 December 2021, Royal Decree Law 29/2021 of 21 December was published in the Official State Gazette, adopting urgent measures in the energy field to promote electric mobility, self-consumption, and the deployment of renewable energies. The main measures contained in the Law were the following:

- In order to promote electric vehicle recharging points, tax rebates are included in the Real Estate Tax (IBI), the Business Tax (IAE) and in the Tax on Construction, Installations and Works (ICIO).

- The suspension of the Tax on the Value of Electricity Production is maintained during the first quarter of 2022.

-The reduced rate of 10% VAT on electricity and the minimum rate of 0.5% of the Special Tax on Electricity are maintained until 30 April 2022.

-The super-reduced VAT rate of 4% for surgical masks is extended until 30 June 2022 and the 0% rate is extended to deliveries, imports and intra-Community acquisitions of health material to combat COVID acquired by health centers and social entities.

  • On 9 November 2021, Royal Decree-Law 26/2021, enacted on 8 November, was published in the Official State Gazette. This law is enacted as a consequence of three resolutions of the Spanish Supreme Court declaring void and unconstitutional certain sections of the Law regulating local taxes with respect to the Local tax on the increase in Urban Land Value. The resolutions made it impossible to calculate taxable amount for this local tax. Therefore, a new regulation, applicable as from 10 November 2021, has been adopted.

  This regulation includes a new provision according to which transfers of land in which it is verified that there is no increase in land value           between the purchase and transfer dates are not subject to the tax.

  Additionally, two methods are established to calculate the taxable base:

  1. Objective system: As in the previous system, the cadastral value is multiplied by certain coefficients depending on the number of years which have elapsed between the purchase date and the transfer date. Such coefficients will now be those approved by municipalities, up to the maximum limit fixed by the law, and which will be updated annually to reflect the evolution of the real estate market. Municipalities will also be able to reduce the cadastral value by up to 15% exclusively for the purposes of this tax.
  2. Real increase in value system: taxpayers will now have the option to be taxed on the actual increase in value when it is lower than the taxable amount resulting from the application of the objective system. The increase in value will be the difference between the transfer and purchase value, considering, in both cases, the higher between the values documented in acquisition/transfer titles and the values verified by the tax authorities.

 

  • On 6 October 2021, Royal Decree Law (RDL) 19/2021, of 5 October 2021, about urgent measures to promote building rehabilitation activity in the context of the Recovery, Transformation and Resilience Plan, was published in the Official State Gazette, establishing the following temporary personal income tax tax credits :
     
    • A tax credit is introduced for works carried out that, according to the energy efficiency certificate, reduce by 7% the demand for heating and cooling , amounting to  20% of the amounts paid for works carried out between  October 6, 2021 and  December 31, 2022, with a maximum limit of EUR 5,000 per dwelling.  Properties that will qualify for this tax credit will be the taxpayer's habitual dwelling or any other property owned by the taxpayer that is leased for use as a residence at that time or in the expectation of being leased, provided that in the latter case, the property is leased before December 31, 2023.
    •  A tax credit is introduced for works carried out that reduce by 30% the consumption of non-renewable primary energy or improve the energy rating reaching the letters "A" or "B" in the habitual dwelling. The tax credit will amount to 40% of the amounts paid for the works carried out between October 6, 2021 and December 31, 2022, with a maximum limit of EUR 7,500 euros per dwelling. Properties that will qualify for this tax credit will be the taxpayer's habitual dwelling or any other property owned by the taxpayer that is leased for use as a residence at that time or in the expectation of being leased, provided that in the latter case, the property is leased before December 31, 2023.  Consumption reduction or energy rating improvement will be accreditable through the certificate of energy efficiency of the dwelling, or improvement of the energy rating of the dwelling issued before January 1, 2023.
    • A tax credit is introduced for works  that reduce by 30% the consumption of non-renewable primary energy or improve the energy rating reaching the letters "A" or "B" in buildings of predominantly residential use. The tax credit will amount to  60% of the amounts paid for the works carried out between October 6, 2021 and December 31, 2023. during the application period, with a maximum limit of EUR 15,000 euros per dwelling. Improvement works must affect the entire building and the reduction or improvement will be proved through a certificate of the building's energy efficiency or improvement of the building's energy rating.
  • On 10 July 2021, Law 11/2021, of 9 July 2021, was published in the Official State Gazette. The main measures contained in this law that affect individuals’ taxation are the following:
    • With effects from 11 July 2021, the reduction applicable to rental income derived from real estate used for housing will only be applicable on the positive net income that has been calculated by the taxpayer in a self-assessment submitted before the start of a data verification, limited verification or inspection procedure that includes in its purpose the verification of such income.
    • “Reference value” is introduced as a real estate valuation criterion for Transfer Tax, Inheritance and Gift Tax and Wealth Tax.  This value also affects the anti-abuse clause contained in the Ley del Mercado de Valores. Reference value is an administrative value calculated by the Catastro that operates as a minimum valuation criterion as regards the mentioned taxes.